SEBI, the Securities and Exchange Board of India, is considering a significant change in the process of delisting companies from stock exchanges.
Chairperson Madhabi Puri Buch announced on Monday that the regulatory body will issue a discussion paper on the possibility of permitting delisting through a fixed price mechanism instead of the existing reverse book-building process.
This move comes as a measure to address the concerns raised and provide a more transparent and straightforward process for delisting.
What is the current procedure?
Currently, the delisting process involves a reverse book-building procedure where shareholders place offers to sell their securities back to the promoters or large shareholders who hold significant influence over the company's policies.
Based on these offers, a delisting price is computed. However, Sebi has expressed concerns about potential manipulations in this process, prompting the exploration of an alternative mechanism.
What are the proposed changes?
Sebi's proposed fixed price mechanism would enable promoters to set a specific price for delisting, giving shareholders the discretion to either accept or reject the offer. This approach aims to reduce the scope for manipulation and ensure fair treatment of all shareholders.
The shareholders will have the freedom to make an informed decision on whether to participate in the delisting process or continue holding their shares.
SEBI has made it clear that it does not support suspending trading in a company's shares during the delisting process. Therefore, investors will have the flexibility to continue trading these shares while a delisting offer is under consideration, empowering them to make informed decisions and manage their investments accordingly.
Are there any additional propositions?
Apart from considering modifications to delisting procedures, SEBI is also focused on reinforcing regulations concerning corporate disclosures with respect to insider trading. This initiative is part of SEBI's comprehensive endeavors to promote transparency and safeguard investors in India's financial markets.
Moreover, SEBI is reviewing industry feedback on a proposed revamp of mutual fund fee structures. The aim of this move is to address concerns over fee structures and align them with investor interests. The revamp will ensure that mutual fund fee structures are fair and reasonable for investors, enhancing investor confidence in the mutual fund industry.
SEBI is actively working on implementing a mechanism for the instant settlement of trades, which would facilitate quicker and more efficient transactions in the financial markets.
The introduction of an instant settlement mechanism will lead to faster trade execution and enhance the overall efficiency of the financial markets.
